What happens to a section 156 election if my corporations stop being closely related?

Once the corporations involved stop meeting the closely related test, because of a share sale, new investor, corporate reorganization, or any change that drops the required ownership level, the section 156 election stops applying as of that point, and the companies generally need to go back to charging and accounting for GST/HST on supplies between them the normal way, going forward, from the date they no longer qualify.

The risk is that this change can happen quietly, through a transaction that isn't primarily about tax at all, bringing in a minority investor, restructuring share classes, or selling part of a group, while everyone keeps treating intercompany supplies as tax-free out of habit, unaware that the underlying eligibility ended. If HST should have been charged and wasn't, that exposure builds up the longer it goes unnoticed, and can surface later as a reassessment with interest.

Because ownership changes are often planned for corporate or business reasons without HST specifically in mind, any transaction that changes share ownership within a group using this election should trigger a prompt check of whether the closely related test still holds, so the corporations can update their HST practices as soon as, not long after, the relationship changes.